Apple reaches €500 million settlement with France over back taxes

PARIS – Apple said Tuesday that it had reached an agreement with French authorities to settle 10 years of back taxes, becoming the latest U.S. company to make a deal with France, which has led a European push for higher taxes on tech giants.

Apple paid nearly €500 million ($570 million) to resolve the case in a confidential settlement reached in December, a source familiar with the case said, confirming a report in French news weekly L’Express.

“The French tax administration recently concluded a multiyear audit on the company’s French accounts and an adjustment will be published in our public accounts,” Apple said in a statement.

“We know the important role taxes play in society and we pay our taxes in all the countries where we operate, in complete conformity with laws and practices in force at the local level,” the company said.

French authorities declined to comment further, citing the confidentiality of tax matters.

Apple is one of several American technology giants in the line of fire in Europe over their tax strategies, which see them route their income through low-tax nations such as Ireland or Luxembourg.

In 2016, it was ordered by the European Commission to pay €13 billion in back taxes to Ireland.

The European Commission said Apple paid an effective corporate tax rate of just 0.005 percent on its European profits in 2014 — equivalent to just €50 for every million.

The deal in France comes as the government prepares to push ahead with its own unilateral “GAFA tax” — an acronym of Google, Apple, Facebook and Amazon — faced with the failure of EU members to agree on how to get technology companies to pay more tax on their European operations.

The levy, to be put to parliament in a bill this month, would affect companies with global sales of more than €750 million and €25 million in France.

It would be retroactive to Jan. 1 and is expected to raise €500 million this year.

French Finance Minister Bruno Le Maire has called the question of how and where global companies pay their taxes “a major issue in the 21st century.”

But an agreement among EU members has proved elusive.

Ireland, Denmark and Sweden have all blocked plans for a levy for fear of dissuading investment, and Germany has proved lukewarm on the issue, fearing U.S. retaliation against its car industry.

The issue has been referred to the Organization for Economic Cooperation and Development, which aims to come up with an international agreement by 2020.

According to L’Express, the deal between France and Apple was clinched after several months of talks, and concerned the small amount of revenue the firm booked in France even as the sales it reported in Europe ballooned.

The report said Apple’s European revenues exploded sevenfold, from €6.6 billion in 2008 to €47.7 billion in 2017, most of which was booked in Ireland where Apple has its European headquarters.

At 12.5 percent, Ireland’s corporate tax rate is much lower than in France, where companies pay 33 percent tax on their profits.

Apple insisted Tuesday that it was contributing to the French economy, saying it had invested €800 million on outsourcing in the country in 2018.

It is the second U.S. tech heavyweight to reach a settlement with French tax authorities in the past year.

In February 2018, Amazon said it had settled a French claim for nearly €200 million and would start declaring all its earnings in the country, ending a dispute that had dragged on for years.

In 2017, however, France’s tax collection drive suffered a setback with a local court ruling that Google was not liable to pay €1.1 billion in taxes claimed on revenues transferred from France to Ireland.

Anti-globalization groups have criticized the government’s push to settle cases out of court.

“If you steal to eat you go to prison. When the GAFAM (GAFA plus Microsoft) steal billions the state does an out-of-court deal,” the anti-capitalist group Attac France tweeted on Tuesday.